The Market Profile graphic allows us to organize data in a way that reveals consistent and predictable market behavior. Rarely are there textbook examples, but today’s trade offered one.
This was the final profile for the Nasdaq futures today. Notice that the entire day’s trade did not exceed the green line. That green line is what we call the “Initial Balance”. It is the range of the first hour of trade. Typically, the range is extended to the top or the bottom. When neither is extended, or 85% of the daily range is contained within the Initial Balance, we call this a “Normal Day”. When a normal day occurs, good trade location is found at the extremes of the range and faded back to the middle.